Council Loans, Wasted Millions, Arrests Made in Northampton

£10.25 million is a lot of money for a fairly small borough council. Think how hard the procurement team at Northampton Borough Council would have to work to make that sort of saving. Yet in 2013, the council loaned that amount to the local Northampton Town football club to pay for a stadium redevelopment – that never happened.

Instead, the money apparently disappeared, after the club handed over £8.75 million to the developer, Howard Grossman and his firm 1st Land Ltd, which later went bust. Of course it didn’t disappear – the BBC did a pretty good job of tracking down the cash, actually. But contractors working on the stadium weren’t paid and work ceased. And now, finally, the matter seems to be coming to the courts. Last week, the BBC reported this:

Seven people have been arrested in connection with a missing £10.25m loan to Northampton Town Football Club. A statement from Northamptonshire Police said it was investigating "allegations of theft and fraud, bribery, misconduct in public office and electoral offences".

The Northampton Borough Council loan was made in 2013 to redevelop the Sixfields stadium. Nine other people have also been interviewed under caution, police said. Detectives would not be drawn on the "nature of the interviews or the identity of those interviewed", Thursday's statement said.

Former Northampton MP David Mackintosh who was leader of Northampton Borough Council when the loan to Northampton Town was granted in 2013 is not one of those arrested, but donations to his 2015 election campaign may be tied up in the affair (hence perhaps the mention of “electoral offences” in the police statement). But an internal council inquiry found that the loan was made “too quickly and with inadequate information and safeguards”, partly because Mackintosh was pressing for it.

Of course, any loan should have been checked out more thoroughly and you might think the logical thing would have been to link stage payments with the work being done on the stadium. (And was no security against the loan sought?) The club was then owned by David Cardoza – we don’t know if he is one of those referred to in the recent announcement but he was previously arrested back in January 2016 so we might assume so. The BBC article suggested that some of the money went to his father and more ended up being used to rebuild his house!

While this isn’t strictly procurement, it is a depressing example of the ability of local government to squander taxpayers money through greed, incompetence, corruption or all three. It also supports one of our theories. Procurement fraud does happen, without a doubt. But it generally seems far easier to get money out of the public sector for dubious purposes via grants, loans, and similar means that aren’t strictly procurement - and therefore have fewer controls.

“A £4.8m taxpayer loan made to an abandoned Leeds city centre hotel project is to be written off. The revelation was made at today’s full council meeting at Leeds Civic Hall, following a question from councillor John Procter … He asked for confirmation that “the £4.8m loan given by the LEP (Local Enterprise Partnership) and held by Leeds City Council for the Arena Hotel scheme has now been lost”. Councillor Lewis confirmed that the money had been “written off”, but also that work on the site was due to recommence by an unnamed developer”.

Voices (3)

Wynkin:
28.11.2018 at 7:14 am

The scandal in Northampton is still dragging on with the council employing their auditors KPMG to look into what went on. They seem to have got nowhere and the costs are in seven figures and rising. KPMG are also the local police auditors.